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Best British shares for January

Group of senior friends celebrating New Year's Eve together

We asked our freelance writers to share the best British shares they’d buy this January. Here’s what they chose:

Christopher Ruane: Lookers

Second-hand car sales dealerships aren’t always the best place to look for a bargain. But I think things could be different at Lookers (LSE: LOOK), which sells used and new vehicles.

Several directors have added to their holdings in December. The chief executive spent £29,000 doubling his own position. I think such confidence may be merited. The Lookers share price has been treading water even though third-quarter results beat expectations. Supply issues could hurt new car sales, though, threatening revenues.

Christopher Ruane does not own shares in Lookers.

Rupert Hargreaves: Next

My top share for January is the retailer Next (LSE: NXT). I would buy this stock for my portfolio as it is a retail champion. It has consistently outperformed the rest of the UK retail industry and its own expectations in the past, and the firm is not slowing down.

Management is investing heavily to maintain the group’s growth rate. As the UK economy continues to recover, I think Next could prosper. Risks that could hold back growth include wage inflation and the supply chain crisis.

Rupert Hargreaves does not own shares in Next.

Niki Jerath: Reckitt

My stock pick for January 2022 is Reckitt (LSE: RKT). The share price is up over 2% in the past month. I could be wrong, but it might go higher.  

I expect demand for its consumer goods brands will rise over Christmas and into the New Year, no matter what happens over the festive period.  

Sales of cleaning brands such as Dettol are sure to rise in reaction to the unfortunate outbreak of the Omicron Covid variant.  

I’m also confident that its other brands such as Strepsils and Nurofen will be useful in January as we nurse our New Year’s hangovers!  

Niki Jerath does not own shares in Reckitt.

Dylan Hood: Lloyds

My best share for January is Lloyds (LSE: LLOY). At the time of writing, Lloyds shares are trading at 46p. The stock has performed well for investors throughout 2021, delivering 33% year-to-date returns.

The main reason I like the look of Lloyds is because of its high growth plans under new chief, Charlie Nunn. The new strategy aims to vastly speed up growth in areas of the business such as property, wealth management, and commercial banking.

If this plan pays off, I think we could see some great growth in the Lloyds share price throughout January 2022 and beyond.

Dylan Hood does not own shares in Lloyds.

Stephen Bhasera: Liontrust Asset Management

Liontrust Asset Management (LSE:LIO) is arguably the best asset management company listed on the London Stock Exchange right now. The results speak for themselves as its share price has appreciated by 58% over the past year.

This company employs several strategies across multiple funds to produce superior returns for investors. With over £30bn in assets under management, its latest half-yearly results revealed revenues of £109m. Forecasts indicate that Liontrust’s growth will be slightly slower in 2022 than the past five years but it is still expected to drastically outperform competitors and so remains a solid pick.

Stephen Bhasera has no position in Liontrust.

Edward Sheldon: Hargreaves Lansdown

My top stock for January is Hargreaves Lansdown (LSE: HL), which operates the UK’s largest investment platform. It underperformed in 2021 and I think the share price weakness has created an attractive buying opportunity.  

There are several reasons I like HL. In the short term, the company looks set to benefit from higher interest rates. That’s because it earns income on its clients’ cash savings. Meanwhile, in the long run, it should benefit as equity markets continue to rise and more Britons save and invest for retirement. It’s worth noting that portfolio manager Nick Train believes that Hargreaves Lansdown represents “one of the greatest UK growth stock bargains over the next decade.”

There are risks to consider here, of course. One is competition from rivals such as AJ Bell (which just launched a new commission-free app) and Freetrade.

Overall, however, I think this FTSE 100 stock looks attractive right now.

Edward Sheldon owns shares in Hargreaves Lansdown.

Andy Ross: Staffline 

Shares in blue collar recruiter Staffline (LSE: STAF) have struggled for much of the last quarter of 2021, after hitting a high point in mid-September. On the flipside, that has made the valuation pretty compelling with a forward P/E ratio of 14. The EV to EBITDA ratio – another measure of valuation – is 7.77, which is low and indicates the shares are potentially undervalued.  

Staffline is a recovery share. It has new executives in place who are looking to build back better after a share price collapse in recent years, following poor leadership under previous management.  

Andy Ross owns shares in Staffline.

Zaven Boyrazian: Focusrite

Focusrite  (LSE:TUNE) provides the music industry with bleeding-edge audio equipment and software. Under its numerous brands, the firm can cater to professionals and hobbyists alike.

The group definitely operates in a niche market with plenty of competitors targeting the same audience. However, thanks to some smart bolt-on acquisitions, and an impressive Net Promoter Score of 74, the company seems to be staying on top.

With double-digit revenue and earnings growth even with live events being delayed, Focusrite looks primed to deliver impressive returns, in my opinion.

Zaven Boyrazian does not own shares in Focusrite.

Paul Summers: Computacenter

I think there could be further upside to the Computacenter (LSE: CCC) share price in 2022. The company has thrived in recent years as corporate and public sector organisations have rushed to update their IT infrastructure. With no end to Covid-19 in sight, I can’t see this momentum slowing just yet.

Clearly, much depends on whether product supply shortages highlighted in October have worsened. We’ll find out in January’s trading update. At 18 times forecast earnings, however, Computacenter’s valuation doesn’t seem excessive given its consistently great returns on capital. There’s a secure 2.2% dividend yield too.

Paul Summers has no position in Computacenter

Roland Head: Morgan Advanced Materials

My top stock for January is Morgan Advanced Materials (LSE: MGAM). This British industrial firm has been making equipment for metal foundries and parts for electric motors (among other things) since the late 19th century.

Growing demand from electric transport and renewable energy is helping to drive new growth. Although there’s always the risk that an economic slump will hit demand, I believe Morgan’s long pedigree and market share should provide some protection for shareholders.

Recent management guidance is positive. I think the shares look good value on 12 times forecast earnings and would consider buying them for my portfolio.

Roland Head does not own shares in Morgan Advanced Materials.

G A Chester: British American Tobacco 

British American Tobacco (LSE: BATS) is a highly cash-generative business, and unhealthy products and regulatory risk aren’t deal-breakers for me. 

It’s my choice for  for January after its recent trading update. It’s making excellent progress on its £5bn revenue target for new category products. It’s also delivered £1bn cost savings one year ahead of plan. Lower debt gives it greater capital allocation flexibility going into 2022, and management said: “We recognise the clear value of a share buyback at the current valuation.” 

In addition to a running dividend yield of around 8%, I’m expecting the company to announce a buyback programme with its annual results on 11 February. 

G A Chester has no position in British American Tobacco.

Royston Wild: National Grid 

I think grabbing some defensive stodge could be a good idea for January. As I type, Covid-19 restrictions are being tightened Omicron infection rates balloon. It’s been suggested that full lockdowns could return after Christmas too. 

The economic implications of these measures for many UK shares could prove catastrophic. But the public health emergency isn’t something FTSE 100 stock National Grid doesn’t have to worry much about. It’ll be needed to keep Britain’s electricity network running regardless of how the pandemic is panning out. This is why I think it could be a top stock for today.

Oh, and at recent prices National Grid offers jumbo dividend yields just shy of 5% for the short-to-medium term. 

Royston Wild does not own shares in National Grid.

The post Best British shares for January appeared first on The Motley Fool UK.

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The Motley Fool UK has recommended British American Tobacco, Hargreaves Lansdown, Lloyds Banking Group, Morgan Advanced Materials, and Reckitt plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.